Industry experts say stigma continues to hold the industry back
As the third anniversary of Canada's legalization of cannabis approaches, retailers say they continue to struggle to find access to basic financial services from banks.
Industry experts say decades of stigma, as well as international pressure, continue to plague the fledgling industry, forcing shop owners to dig into their savings to open their small businesses and limiting the sector's growth.
Charles Varabioff, owner of Kingsway Cannabis, says finding a bank to take on his business account was next to impossible.
I tried every single one of them. And every one [of the banks] was 'no, no, no, no, no,' he said.
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Branch managers, he says, would tell him the cannabis industry is too high-risk.
High-risk? It's no more high-risk than a casino, a bar, or a restaurant, said Varabioff, who also owns a shop in Grand Forks, B.C.
We're legal, licensed, regulated by the city and the government. Canadian banking needs to get on board with this industry.
Most cannabis retailers unable to get chequing accounts
The Association of Canadian Cannabis Retailers (ACCRES) says 50 of its 52 members in B.C. have been denied access at traditional banks, and have turned to local credit unions instead.
We're not even talking about loans or credit cards, said Jaclynn Pehota, executive director of ACCRES.
We're talking about very basic financial services like a chequing account. My members are still struggling, three years post-cannabis legalization in Canada.
She says only two of her members were able to access banking services with a traditional bank and that was due to their longstanding business relationships with the bank while operating in other industries.
Even those folks were shocked by the treatment they received when they went into those institutions. Having a conversation about a company that has the same director, same makeup, it's a legal product, same regulatory framework, and when they come in with a cannabis business the bank goes 'whoa, whoa, whoa,' she said.
Across B.C., there are 400 legal cannabis retailers. Pehota believes there would be more if cannabis retailers could access financial support from banking institutions.
Many of Canada's national banks also operate internationally. And although the retail of cannabis is legal in Canada, it's still illegal in many other countries.
Pehota believes the stigma of the industry, especially as it's viewed by international markets, has forced many Canadian banks to steer clear of the sector.
Banks with American exposure specifically are very challenged by this particular file, she said.
I think we can't underestimate the impact of the stigma. We're talking about 80 years of prohibitionist rhetoric that has been very prominent in society.
Some states have legalized the recreational use of cannabis, but most have not.
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As well, she says Canada is quite progressive in how it views the cannabis industry, yet many international markets see it through a far more conservative lens.
Mike Schilling, president and CEO of Community Savings, agrees. His credit union represents more than 50 cannabis retailers in B.C.
The banks are afraid of the extraterritorial reach of U.S. laws and this makes it more difficult for them, he said.
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